Those patiently following the Greek Bond-Bund spread to its inevitable conclusion have been fully aware that the plan that Europe is betting its entire future on, is patently flawed: namely that austerity, by its definition does not, and will not work. In fact, instead of bringing stability, austerity will slowly but surely eat away at the economy of whatever country it is instituted in - in some cases slowly, in others, like Greece, very rapidly. Indeed, the Greek spread has now risen to levels last seen during the early May near-revolution in Athens, at well over 800 bps. And for the specific consequences of austerity, Germany's Spiegel has done a terrific summary of what it defines as a "death spiral" for the Mediterranean country: "Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back. A mixture of fear, hopelessness and anger is brewing in Greek society." Spiegel quotes a atypical Greek: ""If you take away my family's bread, I'll take you down -- the government needs to know that. And don't call us anarchists if that happens! We're heads of our families and we're desperate." All those who think violent strikes in the PIIGS are a thing of the past, we have news for you. The (pseudo) vacation season is over, and millions of workers are coming back. They may not have money, but they have lots of free time, lots of unemployment, and even more pent up anger. Things are about to get very heated once again, first in Greece, and soon after, everywhere else.

Those patiently following the Greek Bond-Bund spread to its inevitable conclusion have been fully aware that the plan that Europe is betting its entire future on, is patently flawed: namely that austerity, by its definition does not, and will not work. In fact, instead of bringing stability, austerity will slowly but surely eat away at the economy of whatever country it is instituted in - in some cases slowly, in others, like Greece, very rapidly. Indeed, the Greek spread has now risen to levels last seen during the early May near-revolution in Athens, at well over 800 bps. And for the specific consequences of austerity, Germany's Spiegel has done a terrific summary of what it defines as a "death spiral" for the Mediterranean country: "Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back. A mixture of fear, hopelessness and anger is brewing in Greek society." Spiegel quotes a atypical Greek: ""If you take away my family's bread, I'll take you down -- the government needs to know that. And don't call us anarchists if that happens! We're heads of our families and we're desperate." All those who think violent strikes in the PIIGS are a thing of the past, we have news for you. The (pseudo) vacation season is over, and millions of workers are coming back. They may not have money, but they have lots of free time, lots of unemployment, and even more pent up anger. Things are about to get very heated once again, first in Greece, and soon after, everywhere else.

All because the spent too much and produced too little...........

Their government spent too much, and now everyday people will pay the price. It is a shame.

Greece is in this mess because of exactly what Krugman advocates as the "fairest society": the welfare state.

It doesn't work for the most part. People are by nature, free. Especially here in America. People by nature must be coerced / forced into centrally planned conformance. Krugman wants to control society, but he fails to realize that society doesn't want "HIS" control.

WASHINGTON (MarketWatch) — The latest employment data indicate that the U.S. job market is in a holding pattern — the price we pay for a do-nothing Congress focused more on austerity than job creation.

Our economy added 69,000 new jobs in May, for an average of 96,000 over the past three months, with a downward revision of 49,000 for March and April’s data. While this pace of job creation is fast enough to keep unemployment from rising, it remains well below that necessary to bring our economy back to full employment anytime in the near future.

Look no further than Congress for the reasons why this is the case. Last year, Congress refused to put in place the American Jobs Act, which would have helped to reduce unemployment and create jobs. By not acting Congress and the states are instead cutting off the long-term unemployed from any additional benefits and shrinking government spending. While the private sector has been adding jobs for 27 months, for a total of 4.3 million jobs since February 2010, state and local governments have been shedding workers in most months since the fall of 2008, for a total loss 660,000 jobs. These layoffs are pro-cyclical, meaning that they are dragging down economic growth.

While important steps were taken several years ago to boost government spending as the U.S. economy spiraled into the Great Recession of 2007-2009, including the American Recovery and Reinvestment Act of 2009, in recent years cut-backs at the state and local level have cut spending so sharply that overall, government spending has grown very little. In the first quarter of this year, government spending fell by at an annual rate of 3.9%.

About 660,000 public-sector jobs have been lost, even as the private sector has created millions of jobs.
This is happening even as those who are unemployed are having an exceptionally challenging time getting back into jobs. The share of the unemployed who are “long-term unemployed,” that is, out of work and searching for a job for six months or more, was 42.8% in May. This is the 30th month where that share has been at or above 40%. Prior to 2010, the share of the unemployed who were long-term unemployed had never risen above 26%, a high hit when the unemployment rate was just over 10% in mid-1983.

Now, why do the Conservatives get it wrong all the time, but are still considered worth listening to at all? Simple. It's confirmation bias. If you are reading this and are Conservative, chances are, you have already rejected it. It does not match your preconceptions, and therefore must be discounted. Besides it references science- and we all know about that elitist stuff.
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Krugman accurately predicted how today's economy would play itself out based on Republican intrasigence and President Obama's willingness to too easily compromise with Republican Congress. The articles are there to prove that he was right about austerity
meausres all along.

The United States Is Not Greece
By Stephen J. Rose and William T. Dickens

Peter Schiff in The Real Crash and others see the U.S. as having the same problems as Greece and that what we see now in Greece is just a prelude to much larger problems in the United States. This is a false analogy that misrepresents the effects of large deficits as well as the specific problems that Greece faces.

While large government deficits can lead to economic distress, the relationship is weak and complicated. Before the financial crisis began in 2008, most of the countries that now need bailouts in Europe had relatively small levels of government debt (e.g., Italy, Spain, and Ireland). In fact, it was the collapse of housing and other asset bubbles and the economic problems caused by the crisis that led to the debt problems in these countries today. So for the U.S. and others, it was the economic problems that caused rising debt and not the other way around.

Further, history shows many examples of high levels of debt not causing problems when circumstances are different (for example, in Japan today or the U.S. after World War II). A sign that debt problems are becoming economic problems occurs when the interest rates on a country’s debt rise. This indicates that investors are nervous about default and demand a premium to hold this debt. Of course, rising interest costs make the problems worse and put more pressure on the affected country.

Most countries that face rising interest costs on their debt will see the value of their currency decline. But, as a member of the European Monetary Union (EMU), Greece does not control its own currency (whose value of the euro by Germany and France). The United States has its own currency and its own monetary policy.

Not only does the U.S. have its own currency, its debt is denominated in dollars. Over the past three decades, many people have predicted that foreigners would stop buying our debt, or at least demand higher interest rates for the extra risk of currency devaluation. But this has not happened. Instead, when the world financial crisis exploded, investors flocked to US debt, driving rates down to very low levels. Repeatedly the market has disagreed with prognosticators of doom for the US.

Part of the reason for the strength of U.S. government debt is that our competitors are in worse shape than we are. If not the dollar, then what? The euro? The pound? The Chinese renminbi? (That would be difficult, because the Chinese restrict foreign investment.) Economic factors matter, and the size, stability, openness, and productivity of the US economy still make it the obvious currency of choice. The U.S. Gross Domestic Product (GDP) is 50 times as big as that of Greece, seven times the size of Great Britain’s, five times the size of Germany’s, and almost four times the size of Japan’s GDP.

The future of the U.S. economy must be assessed on its own merits, and the experience of Greece has little relevance to our situation. Greece is less like the U.S. than one of its 50 U.S. states. But U.S. states have more protection by being part of a long standing political union than Greece, which is loosely connected to the rest of Europe. When times are tough here, federal aid is very responsive to local business conditions, due to shared federal funding of unemployment compensation, Temporary Assistance to Needy Families, and Medicaid. In total, the federal government provides 20 percent of state and local budgets. In some states, total federal payments are 40 percent greater than the total federal taxes paid by the state’s residents. For Greece, aid is more modest and given grudgingly. Some Greeks are living, but it is much harder to start over in another country with another language than it is to move from one state to another.

While high deficits during economic downturns aren’t a major problem now, continuing high deficits are unsustainable in the long run. If Congress does not agree on some combination of spending cuts and revenue increases, deficits after the economy recovers will only fall to five to six percent of GDP rather than the two to three percent that is sustainable. This will have negative consequences on growth and will probably lead to a rising debt to GDP ratio and then larger deficits as interest payments on the debt grow. Ultimately, no country can continue to increase its debt faster than its ability to pay that debt and at some point credit markets will demand larger and larger premiums to lend that country money.

We are not Greece, but we could face unnecessary short and long term economic problems if our political leaders don’t come to sensible compromises.

Dr. Rose is a Research Professor at the Georgetown Center on Education and the Economy and an EconoSTATS Contributor. Dr. Dickens is University Distinguished Professor, Northeastern University .